$7.6B HMA buyout includes Venice, Charlotte hospitals

Announcement came Tuesday after months of speculation at Venice Regional and elsewhere

By Donna Koehn and Dale White

Venice Regional Medical Center, which started out in the 1950s as a small hospital built with community pride and door-to-door donations, is being sold. Again.

This time, the buyer is health care giant Community Health Systems Inc, through a $7.6 billion deal to scoop up all of Health Management Associates' hospitals. The sale is expected to be completed by March of 2014, pending stockholder approval.

The for-profit HMA, based in Naples, owns Venice Regional, Charlotte Regional Medical Center in Punta Gorda and Peace River Regional Medical Center in Port Charlotte. Also affected are 20 other HMA hospitals in small and midsize markets in Florida, as well as newly acquired Bayfront Medical Center in St. Petersburg.

The for-profit Community Health Systems, based in Tennessee, owns two hospitals in the state. Its acquisition of HMA will give it a total of 206 facilities in 29 states.

The announcement came Tuesday after months of questions and unease at Venice Regional and elsewhere. It also comes as the Southwest Florida health care market grows more fiercely competitive at the outset of the Affordable Care Act — the most significant health care program since Medicaid launched in 1965.

Venice Regional staff members declined to discuss the sale, as did CEO Peter Wozniak.

This month, Wozniak attempted to deflect physicians' concerns with a letter in which he said he was not privy to the company's plans.

“Rumors of mergers and acquisitions abound in every industry, particularly in health care,” said his July 12 letter, obtained by the Herald-Tribune.

Regardless of what happens, he asserted, “we will continue to grow and strive to meet the community's needs.”

Now Venice's top employer, 312-bed Venice Regional started out in 1951 as a private, nonprofit facility with 14 beds.

In 1995, it rebuffed higher offers to sell to Bon Secours, a nonprofit begun by nuns, in keeping with its community focus.

When Bon Secours sold the hospital to HMA in 2005, insiders predicted catastrophic changes ahead in health care.

Little changed for patients.

“A lot of times, when hospitals change hands, people think the world is coming to an end,” said Bruce Vogel, associate professor of Health Policy Research at the University of Florida. “Rarely does that happen. Rarely does the sky actually fall.”

Venice Mayor John Holic said previous ownership changes at the hospital have had positive effects on Venice.

For example, Holic said, the Gulf Coast Community Foundation, then known as the Venice Community Foundation, was founded as a result of Bon Secours' purchase. After HMA took control of the hospital in 2005, Holic said the hospital became a well-respected cardiovascular treatment center.

The HMA “takeover was very positive,” Holic said, “and the only thing I can hope is that this change is just as positive as the last.”

John Ryan, president of the Venice Area Chamber of Commerce, said the hospital has been a member since at least 1972, and employs more than 1,000.

“We hope for the same quality services and strong community partnerships,” he said.

Community Health Systems said it will pay a combination of cash and stock valued at $13.78 for each HMA share.

“We are pleased that this combination will create an even stronger organization for the benefit of our patients, physicians, associates and the communities we serve,” William Schoen, HMA board chairman, said in a statement.

At the market's close Tuesday, HMA and Community Health stocks were down, 11 percent and 3.5 percent, respectively, while trading overall was essentially flat.

Seeking stability

HMA shareholders have been looking for stability.

Major shareholder Glenview Capital Man-agement started an effort in June to replace HMA's board of directors, an effort the company had resisted.

HMA president and CEO Gary Newsome announced in May that he would retire to take a position with The Church of Jesus Christ of Latter-day Saints.

Also on Tuesday, HMA announced that it had received additional subpoenas in June and July from the Department of Health and Human Services as part of a long-running investigation into ER issues.

At least in part, that investigation centers on whether HMA pressured physicians to admit ER patients to bring in more revenue.

The CBS program “60 Minutes” broadcast a piece on the issue late last year, with HMA arguing that it had not pressured physicians to make admissions decisions.

Venice Regional has not been implicated in any of those investigations.

Jeff Wolfson, distinguished service professor in public health and medicine at the University of South Florida, has followed the issues in Southwest Florida health care. He said the buyout “rescues” HMA amid its financial and legal issues.

“The name of the game going forward is dominion and control of resources in order to exert financial and even political leverage against commercial insurers, managed health care plans and most critically, the federal government as the Affordable Care Act unfolds,” Wolfson said.

Patient concerns about higher costs dog for-profit hospitals. A federal report issued in May allowed consumers for the first time to compare prices on common procedures; among area hospitals, Venice Regional often had the highest prices.

Aaron Hummer, 74, said he and his wife, Margaret, have been to the hospital about 20 times since they moved to Venice in 2003.

He believes the hospital puts too much emphasis on money. “I was worried about my wife but all they cared about was getting paid,” he said.

Sarasota Memorial Hospital, a not-for-profit that enjoys a largely positive reputation among patients, has been pushing into Venice to compete for patients.

Venice Regional and its physicians have moved to block Sarasota Memorial's attempts to open a medical complex about 5 miles from the hospital and an urgent care center just more than a mile away.

“Residents of communities sometimes view not-for-profits as more community friendly — but that is not always the case, nor are the data always supportive of that presumption,” Wolfson said.

“Not-for-profits can and do play in as much of a cut-throat manner as do the for-profits.”

“When the larger, local, single hospitals have been acquired or merged, then the attention began to focus on one system acquiring another, such as with CHS and HMA, Wolfson said.

“Bigger and bigger fish scoop up sometimes smaller — but often equal or larger fish — through financial leveraging and good corporate management.”

He said it will be up to the new bosses to make sure profits don't override compassionate care.

Staff writer Shelby Webb contributed to this report, which includes information from The News Service of Florida.

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